The market’s identity crisis could reshape Gold's price outlook

It’s one of those weeks where nothing quite adds up. Stock futures are sliding as if war is about to erupt, yet gold, normally the go-to in times of crisis, is drifting lower, almost as if peace is on the horizon. Oil and natural gas prices are charging upward, as if conflict is inevitable, while bond yields are rising too, as if the world is quietly expecting a diplomatic breakthrough. Even silver seems unsure of itself, slipping just enough to raise eyebrows. 

In short, the market can’t seem to make up its mind - and when sentiment is this scrambled, gold rarely stays still for long.

Gold’s price movement: Why the odd silence?

For all the geopolitical fireworks, gold is trading in a narrow range between $3,340 and $3,400 - hardly the behaviour of an asset under pressure. 

It’s the kind of subdued movement you’d expect from a sleepy summer session, not a market staring down the possibility of protracted Middle East conflict. But there it is: flat, stubborn, and strangely calm.

Part of this can be chalked up to timing. The Juneteenth holiday in the US brought lower trading volumes, and low liquidity has a knack for muting reactions or exaggerating them, depending on the hour. Yet even before the holiday lull, gold had been behaving oddly subdued, shrugging off headlines that would usually send it flying.

Gold and inflation

What makes this moment so fascinating is how contradictory the broader market signals are. Oil and natural gas are acting like we’re on the cusp of something serious, buoyed by reports of Israeli airstrikes on Iranian infrastructure and warnings of potential US involvement. The risk to global energy flows, especially through the Strait of Hormuz, which handles about 20% of the world’s oil, feels very real.

On the other hand, rising bond yields suggest a degree of investor optimism, or at least a belief that any geopolitical disruption will be short-lived. The US dollar is also regaining strength, helped along by the Federal Reserve’s steady hand and Jerome Powell’s cautious tone. The Fed held rates at 4.25%–4.50% in its latest meeting, but signalled it’s in no rush to start cutting. For now, that means the dollar stays attractive - and gold, priced in dollars, stays under pressure.

Gold market trends: Is gold just waiting?

Despite its current calm, gold may simply be biding its time. Markets have a habit of reacting slowly - until they don’t. A single headline, a surprise strike, or a shift in central bank messaging could be enough to snap gold out of its trance. And when that happens, the move could be explosive.

We’ve seen this before. During the US-Iran standoff in 2019, gold surged 10 - 15% in a matter of days. 

When Russia invaded Ukraine, gold didn’t immediately soar - but once it moved, it didn’t look back. Markets’ early confusion often gives way to sharp repricing once a dominant narrative takes hold.

Right now, there’s no clear consensus. Is the world edging closer to war, or are backchannel peace talks quietly defusing the situation? Are central banks bluffing about their hawkish stance, or will inflation force them to stay tight? Until traders pick a side, gold remains the great reflector of market uncertainty - quiet, but alert.

Middle East conflict impact on gold prices

The geopolitical backdrop is nothing short of combustible. Israeli Defence Minister Israel Katz has openly called for intensified attacks, even targeting Iran’s Supreme Leader Khamenei by name.

Russia, meanwhile, has warned that any US military intervention in Iran would be “extremely dangerous” and bring “unpredictable consequences.” Reports also suggest President Trump is weighing military options, including action against Iran’s underground Fordow nuclear facility.

Against this backdrop, gold’s quiet feels more like hesitation than confidence. Investors might be holding their breath, waiting for the next piece of news to tip the balance. But gold doesn’t need a war to rally - it needs uncertainty, and there’s plenty of that already baked in.

Gold price outlook: What to watch

For gold to break higher, two things likely need to happen. First, a meaningful escalation in the Middle East, something that clearly threatens global stability or energy flows, could spark a surge in demand for safe havens. Second, a shift in Fed language or US inflation data (such as the upcoming Core PCE Price Index) that suggests monetary policy may loosen sooner than expected.

At the time of writing, Gold is showing a clear sell bias on the daily chart, with the volume bars showing dominant sell pressure over the past few days. However, the volume bars show waning sell pressure, hinting that we could see a price uptick. If we see an uptick, prices could find resistance at the $3,440 and $3,500 price levels. Conversely, if we see a further slump, prices could find support at the $3,300 and $3,260 support price levels

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